Anyone has a view on this. Appears several Western miners are leaving due to Government favouring Chineses interests. Appearantly owed Billions for Arms.
Part of artivle below. Guess SBS is mostly in this country directly and via sunridge. (Sunridge down form $3.6 to $1.60) and still downtrending.
MDN [TSX:MDN], formerly Northern Mining Explorations, was one of those few before it decided to withdraw from Eritrea on July 11, after waiting since 2003 for an exploration permit for its Haykota property.
Richard Corbo, adviser to the CEO of MDN, told Resource Investor that the Eritrean government never said MDN couldn’t have a permit - just that the company had to wait. Eritrea never gave MDN a reason for the permit being put on hold.
“We’d love to know why,” Corbo said. “We can only suspect that they’ve not been allowing permits to anybody since the beginning of the year.”
Corbo said Eritrea’s border conflict, ongoing since a two-year war with neighbouring Ethiopia from 1998 to 2000 in which 13,000 Eritreans died, could indirectly be the cause of permit scarcity.
“The fact is that … unfortunately, [Eritrea] owes a lot of money to the Chinese for arms. We’re talking here, billions of dollars of arms that they bought from the Chinese, and most probably they will have to face payback time. They’re probably looking to offer properties and license or mining rights or whatever to the Chinese.”
“Eritrea is at the high end of the risk curve for the mining industry given unclear regulations, an authoritarian regime and the ongoing conflict with Ethiopia. Security is another major concern for Westerns ... The current risks in Eritrea and the dynamic situation on the ground make it off-limits to virtually all firms but those with the highest risk tolerance.”
Nevsun isn’t without its share of problems with the Eritrean government, however. In September of 2004, after the company had finished up a 195-hole, 30,000-metre drill program that produced encouraging results, the Eritrean Minister of Energy and Mines ordered a halt to all mining and exploration activities.
The government gave no reason for the policy change, but there’s word within this Casey report that a high-ranking Eritrean official confirmed off the record that it was because the government figured out just how big the deposit was, and it wanted a bigger cut.
The ban was lifted in February 2005 after the government reviewed the laws and raised its maximum-available equity interest in Bisha and other properties from 20% to 30%.
Corbo said companies currently in Eritrea are just looking to stay positive, and he said he thinks the country, which gained its independence from Ethiopia in 1993, is leading those companies on. So great that, even though Corbo said MDN “can’t trust the overall situation” in Eritrea, company officials couldn’t rule out rethinking its withdrawal from the country if things end up looking on the up-and-up.
“We’ll keep our ears open,” he said.
SBS Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
